While I believe social networks will con­tinue to gain traction and popularity as effective marketing venues, I don't believe the current platforms and communities have much of a chance to emerge as top market­ing venues, as a meaningful percentage of the overall online mix.

The key barrier to entry for social net­work advertising is the context. Users have demonstrated time and again that they not only ignore advertising in social media, but eschew it. As proof, Facebook generates around $2.50 in advertising revenue per user per year. (Hint: This is not good.)

Social networks are seen as personal collaboration and communication plat­forms, not information or research tools. The challenge will be for the largest social networks to create an environment where advertising is relevant and appreciated. Look for aggregation and growth of niche social networks in the next few years, which will create improved targeting and response rates, but will be hindered by the ability to provide meaningful volume.

By comparison, search engines like Google are able to make billions of dollars due to the contextual use: Search engines effectively connect buyers with sellers. Advertising is welcomed. Thus, they will continue to dominate online marketing for years to come. Even though costs associated with search will continue to increase due to competition, engines will continue to deliver impressions, clicks and conversions that outperform just about every other form of marketing — online and offline.

As a 15-year marketing veteran, I'd be lying to you if I told you that I didn't see enormous value in the practice of search engine marketing (SEM).

There's one problem, however, and that is that like online advertising and e-mail marketing, the effectiveness of SEM is beginning to erode.

No, I'm not suggesting that any company should not be employing SEM. However, I will be so bold as to say that the future of marketing is social, and those who choose to ignore it are going to miss out for three reasons: First, it's infinitely scalable; second, peer-based recommendations will continue to be the leading driver of purchase intent; and lastly, unlike SEM, marketing via social networking requires relatively fixed costs.

To illustrate how this works, think of a site like Amazon.com, with millions of rat­ings and reviews. Imagine that I like a book I bought, so I decide to write a glowing review and post it. Then, a new service called Facebook Connect — with my con­sent of course — proactively includes a link to the review in my Facebook newsfeed. Because I have more than 500 friends on Facebook, those friends see that I wrote a review, and some of them decide to click on that review link. Now their Facebook newsfeeds (with their consent) broadcast that they just read my review, and some of their friends will click.
<a href="http://www.buzzdash.com/polls/social-networks-152086/">Social networks:</a> | <a href="http://www.buzzdash.com">BuzzDash polls</a>

See how powerful marketing through social networks can be? It won't replace SEM anytime soon, but it's certainly becom­ing more effective in a hurry.

DMNews' DECISION

Strout contends social networks offer fixed costs, and peer-based recommendations are a driving force behind purchases. But Lewis argues that unlike search, social networks will be hindered by the ability to provide meaningful volume. As long as search fills that need, it will continue to dominate.